Barclays bank forced to admit it paid just £113m in corporation tax in 2009

[pinkteddy]

At the same time it recorded £11.6bn profits.

Can't quite believe there isn't a thread on this already.

article here

It's several hundred million more tax than I contributed, or am likely to ever contribute.

That amounts to 1% of their profit. I'm sure you are paying a lot more than 1% tax on your earnings panzee!

Is there any possibility they have paid some tax elsewhere in the world??

What was its total tax take? Not just ct

Apparently its total bill to the UK taxman was £2m ? but most of this comprised payroll tax on employees' wages.

Sorry I think that must be £2bn.

Up in front of disgruntled MPs last month, Mr Diamond suggested that much of the bounty would trickle down for the common good. He pointed out, accurately, that Barclays had handed £2bn to the Revenue last year, a figure that sounds respectable enough in the context of pre-tax profits of £6.1bn for 2010. What he did not point out, but we have now gleaned thanks to some forensic digging by the impressive young MP Chuka Umunna, is that just £113m of that £2bn was corporation tax, a 2% drop in the ocean of the company's global profits. The rest was paid through other levies which scarcely touched profits and were largely paid by employees.

I would think the reason why they paid so little this year is they made such a significant loss last year and could therefore offset the loss for tax purposes.

Barclays made a thumping loss last year. Carried the loss forward to offset this year's profits. Just the same as your small, independent butcher, baker or candlemaker does.

It's what grovel said.... Corporation Tax is calculated on the previous year's profit or loss and that's standard accounting practice, regardless of size of business. Barclays also pay other taxes.

More generally, I think the bank-bashing has to stop at some point. We need a strong banking sector to be part of the national recovery. Barclays was not one of the banks that needed a cash hand-out in 2008.

Perhaps when the banks start acting responsibly, stop ripping off consumers and no longer expect the public purse to bail them out the bank bashing will stop.

We do need a strong banking sector. Why did we end up with a banking sector that needed such massive bail outs? And how can we be sure it won't happen again?

We can't be sure because them there banks are pretty resistant to regulation, aren't they? Because they can be trusted, can't they?

Bash and bash those banks until they learn to be responsible.

I am sick of the private sector claiming to be more effective, profitable etc etc and then it sets up with its begging bowl from the public purse.

I was wondering when this would appear along with the cries of fat cat bankers.

For those who bother to read under the headline, you'll see that most of Barclays profits are earned abroad. Naturally they will pay corporation tax in that country and not in the UK. If you take that into account, the rate is more like 25% in 2010 which compare to the UK rate of 28% is pretty comparable.

Or are we suggesting now that banks should be taxed twice?

Barclays did not need a govt bailout so the argument that they somehow should be taxed more because they have profited from the cheap money they can borrow as a result of lower interest rates is about as fair as suggesting I pay more tax cos my mortgage went down as I am on a tracker.

It is just wrong on so many levels.

Talking about being taxed twice, one could argue that many of us are or will be to some extent and in some way or another.

however, taxed twice literally is silly, hows about just taxed more? we are talking billions here afterall.

Talking about being taxed more is a different topic and a valid debate.

However, the headline is inferring that Barclays is dodging its corporation tax which when you read the actual details is simply not true.

The simple fact is that most of the bank's earnings are abroad. Therefore the tax they pay is in those countries. Yes, their net profits are still huge in real terms but they've paid their tax.

Let's say you get a contract in Germany. You work there for a year, earn a good salary and pay income tax to the German govt at the current rate. You then decide to transfer that money to your UK savings account. Should that money now be subject to income tax again in the UK?

NiceGuy2: That's not quite right though. Currently, corporations and financial service companies with branches abroad DO pay the difference in tax rates between this country and whichever other country they are based in when the money returns to britain. So the treasury benefits when the money returns to Britain.

But the government is proposing to make these corporations exempt by making changes to corporation tax law in the near future.

So while wringing his hands and wishing that there was no other way to fund the deficit than by slashing our public services, the prime minister is cutting the amount of tax that corporations pay, even when that money has been passed through a tax haven.

Instead of reforming the finacial sector to discourage the loss of taxes through tax havens, this government is actively encouraging it with this proposed legislation. Sickening.

And while the banks remain unregulated, they will go right back to working in the same way that caused the financial crisis. Cries of "stop the bank bashing" just won't cut it. We don't need a banking sector that is out of control with greed. We need a banking sector that works.

make that another way

With regards to the exemption to corporation tax, I know what you are saying RaggedRobin. May I suggest you find CinnabarRed's post a little while ago which explained this brilliantly. With luck she will repost this in the Politics section as it was IIRC in the bear pit of AIBU.

As with most things, when you delve beneath the eye grabbing headline, things are more complex. I must admit at first glance I too disagreed with the exemption but having read CinnabarRed's post, I can totally see the logic and the only question remaining was if the timing of such a cut is acceptable politically. Economically it made sense.

what was the gist of the argument, niceguy?

Cinnbar's post on Monbiot's article was very good. And possibly better than This LibDem Voice Blog which covers the same points.

I love the blog's summary:

"You?ve got to give it to Monbiot, though ? what a great way to create a scandal out of such a dull subject and such flimsy evidence. It?s a cunning journalistic wheeze: pick an unpopular target (big business); invent an entirely spurious (and unrelated) ?plot? and then tell your readers that it?s too dull, complicated and obscure for them to understand (so no one challenges your proposition). Genius!"

Well it appeared to fox Robert Peston - who promised to blog on it and failed. .

The headline was inflamatory as Barclays' corporation tax was reduced by carried forward tax losses. That is something all businesses can do. Also as others have pointed out Barclays didn't take UK taxpayers money during the financial crisis.
Just to balance things a bit its worth remembering that the Financial Services sector contribute over 11% of the total UK tax take (the largest single contributor).
www.cityoflondon.gov.uk/Corporation/media_centre/news_2010/UK+financial+services+contributes+%C2%A353.4bn+in+tax+during+2009-10.htm

Good link Jackstar but I agree that Cinnabar's post was easier to understand for the layman.

RaggedRobin, I'd be interested to hear your view on the subject after you've read the article above and Cinnbar's which I link to here (about halfway down)

Didn't Barclays benefit from the bail-out of AIG? As well as being part of a sector that is entirely propped up by the taxpayer guarantee that fucked up banks will be bailed out - unlike any other industry. AND quantitative easing.

This story that it's all far too complex for mere mortals to understand is the one that got us into this trouble in the first place. 'Ooh, we City types are so jolly clever the rest of you don't need to worry your pretty little heads about it. We can design fantastically complex products that eliminate all risk, you know.' A bit of transparency and communication with the public - the people who shoulder that risk - might have allowed someone to point out this was the Emperor's new clothes all over again.'

I'm happy to be corrected on this one as I am not 100% sure. But as I understand it, AIG owed ppl a LOT of money. The US government bailed them out and yes a lot of this money went to Barclays since it was owed to them.

I don't see that as Barclays being at fault anymore than I see the UK treasury bailing out Icesave savers as the savers fault.

And yes, Barclays no doubt has enjoyed the cheap money available thanks to the 0.5% base rate. But again, saying thats their fault would be like saying I am wrong to be paying low interest on my mortgage.

At the end of the day, Barclays has remained independent and moved heaven & earth not to take public money. That's partly because of the conditions we attached to the money and they didn't want to be beholden to those terms. Fair enough and they survived. Therefore its only right & proper that if they pay whatever the going rate is in tax they can continue to enjoy their profits.

At the moment we seem to be kicking a bank which hasn't taken public money, paid its taxes legally due in whichever country it was earned in. And on what basis? Some headlines from journalists which are proven to at best biased and at worst outright lying.

cheers for the link. will read, digest and come back tonight... child neglect occuring in the other room!